DESCRIPTION: This revised proposal seeks funding to use the Health and Retirement Survey (HRS) as well as the 1989 Survey of Consumer Finances (SCF) to study Americans' saving and life insurance behavior. Key questions addressed are a) Do American households save and purchase life insurance in accordance with the rational dictates of economic theory? and b) Are American households saving enough and purchasing enough life insurance to maintain their living standards in retirement and in the event of the death of a principal earner? This study will also identify the types of households that undersave and underinsure and attempt to explain the reasons for this behavior. The main objections to the previous proposal were 1) lack of a theoretical model, 2) lack of specificity with respect to models to be estimated and the hypotheses to be tested, 3) failure to explain the algorithm behind ESPlanner, 4) lack of specificity with respect to source of inputs to ESPlanner, 5) questionable relevance of the HRS population's behavior to baby boomers, 6) data measurement errors, and 7) size of the budget. This application 1) presents a theoretical framework for the proposed research, 2) specifies more precisely the models to be estimated and the hypotheses to be tested, 3) proposes formal tests of rational life insurance and saving behavior, 4) presents ESPlanner's algorithm, 5) clarifies source of ESPlanner inputs, 6) adds the use of SCF data to study the behavior of the baby boom as well as other generations and make cross-generation comparisons, 7) allows for random measurement error in the data by using median regressions to form more robust estimates of saving and insurance inadequacies, 8) significantly reduces the size of the effective budget by proposing tests of rational life insurance and saving behavior as well as the analysis of the SCF data, and 9) points out that the budget requests only 25 percent time for each researcher, not the 50 percent figure stated in the critique.